By the time the breakfast TV shows went live on the morning of 24th June 2016, it looked like all the worst Brexit predictions were coming true. The Pound seemed to be in free-fall, it lost 8% of its value against the Euro in that one day.
At the height of the Brexit negotiations, the Pound would even hit one of its lowest ever points at just £1:€1.09.
Britain formally left the EU on January 31st 2020 and the rate has been fluctuating ever since, never reaching its pre-Brexit range.
Twenty years of highs and lows
It’s important to look at a bit of historical context when reviewing GBP/EUR since Brexit. The Euro was launched on 1st January 2002 replacing the national currencies in 12 EU member countries.
That month £1 got you over €1.60. It has never been this high since.
18 months after the launch of the paper currency, the Pound was sitting at around the £1:€1.45 mark and would sit in this space until 2007.
The financial crisis of 2007/8 would see the Pound’s value plummet to its lowest ever point, gaining near parity during Dec 08/Jan 09.
Between the peak of the financial crisis and the passing of the EU referendum legislation, the Pound made a steady climb over the years, especially between 2013 and 2015 getting up to £1:€1.40 peak in Jul 2015.
However once it became clear to the markets that the referendum would actually go ahead, the Pound started to slide.
Bumpy negotiation rides
The result of the referendum threw the entire political and economic system into chaos. The GBP/EUR rate followed the ups and downs of the negotiations like clockwork. Losing value at moments when it looked like the sides would walk away without a deal and rallying at moments when it looked like there could be agreement.
Notable lows came firstly in the Summer of 2017 after Theresa May lost her majority in the snap general election in June. The rate would hit £1:€1.08.
In the Summer of 2018, it would fall again after a small climb to £1:€1.10 after several key government ministers including the then Foreign Secretary Boris Johnson and the Brexit Secretary David Davies resigned in protest at the ‘Chequers Agreement’, the PM’s Brexit negotiating plan.
The final low point would come in Aug 2019 when newly appointed Prime Minister Boris Johnson declared that the UK would leave the EU on 31st October 2019 without a deal if none could be made. At this point, the Pound would hit one of its lowest ever points at £1:€1.06.
The Pound would rally at the end of the year following both the successful negotiation of a deal and the result of the snap election in Dec 2019 which saw Johnson return with a large majority.
It would hit £1:€1.20 on the day after the election results were announced, a rate not seen since before the referendum.
The double whammy of Covid-19 and Brexit tension
Britain formally left the European Union at midnight on the 31st January 2020. Just 8 weeks later, the whole country was in a nationwide lockdown. Once again the Pound/Euro rate would hit the low mark of £1:€1.06 in March 2020.
It’s difficult to analyse the effects of Brexit since March 2020 on the GBP/EUR relationship because the economic impact of Covid-19 has been so great.
Ongoing tensions due to the Northern Irish Border and threats from either side have been continually interspersed with horror stories and economic pains from the pandemic.
Since a December 2020 low of £1:€1.09 following the announcement of the second national lockdown, the Pound has been following a steady climb against the Euro.
At the time of writing it’s at a new two year high of £1:€1.20, in large due to the news that Omicron is not as bad as previously thought and the relaxing of Covid restrictions.
There is still potential for upheaval in the near future, the relationship between the UK and the EU is still tense at the moment with the issues of the Northern Irish border still not settled.
An escalation in rhetoric and/or potential legislative or judicial action could shake this pairing up once again.